We Need a Fundamental Miracle Pt. II

The Dunning-Kruger Effect

Welcome to the age of outrage where all who disagree with me are absolute idiots and morons, and I could never be in the wrong on anything…

Isn’t that the premise of just about all internet forums these days?

Maybe the problem isn’t the stupidity of others but rather our own inflated sense of moral and intellectual superiority. Maybe civility dies when we lose the grace to practice civil disagreement. Maybe those we disagree with, may, in fact, know something we don’t. Maybe Facebook comment threads show exactly why “enlightened” and technologically advanced societies, are largely comprised of tribal, biased and arrogant people who are more than willing to go back to 1930s ways to settle their differences. Maybe, as our technology has progressed, we’ve socially and culturally regressed in some critically important ways. Maybe, at least from time to time, I’ve been one of these people.

Being intelligent shouldn’t by any means act as an indication that an individual is right on any particular opinion. While it may be harder to dismiss the outrageous and quickly assumed false claims held by an individual notably more intelligent than ourselves, especially when compared to claims made by an individual notably less intelligent than ourselves, we’re all aware of many occasions when great men and women have come to conclusions as to the nature of reality that turn out to substantially differ from the real state of reality. And while we wouldn’t want to belittle the importance and necessity of our education and intelligence, it’s also important not to assume to the educational institutions and world of the intelligentsia a greater degree of honor than they deserve.

Without spending too much time on Descartes’s epistemological framework, which I assume that few readers would be familiar with and far fewer would even care to think about, it’s useful to observe some of the observations that Descartes makes when he attempts to define the near undefinable, intelligence; namely ‘promptitude of thought,’ … ‘clearness and distinctness of imagination’ … ‘in fullness and readiness of memory’1.

Prior to this, Descartes argues that reason does not stand as a measure of intelligence, and without borrowing from his witty yet somewhat underwhelming justification for this assessment, I think we can work quickly to the same conclusion if, for no other reason than reason itself forms the justification for all human debate, learning, and growth. If the intelligentsia believed in anyway, that those less intelligent than themselves did not possess the same quantity, quality or outright ability to reason as they do, the intelligentsia simply wouldn’t engage in the arduous dialogue of convincing the mere mortals to the extent that they do and certainly wouldn’t be pro-democracy which equates the power of all opinions to be equal. I can only see one possible explanation for why this theory may be wrong, namely that the intelligentsia themselves aren’t that logical, at least when it comes to broader social interactions, which is a counter that many would argue has some weight to it. The problem, however, with this counter is the issue that a lack of consistency when it comes to convincing those who theoretically could not be convinced pokes holes in the infallibility of the intelligentsia’s reasoning more broadly. If the intelligentsia could not figure out something as simple as those more ‘simple’ than themselves, how could we entrust them with figuring out anything more complex than themselves?

The fact that we engage in debates at all is evidence, to at least an implicitly held belief, that should our opponents be exposed to the same data, premise, experience, and arguments that we ourselves have been exposed to, that they too would come to the exact same conclusions that we do. What this implies is that the foundation for disagreement is either false data, asymmetric data, bias or false premises.

Interestingly, it’s also possible and even common for some with a superior intellectual capacity to our own, to err further away from average deviations in what may be considered ‘common sense’. It seems as though, that there are certain beliefs that are so outrageous to most common men, that the only conceivable adherents have to be those who have never climbed down from their ivory towers of the intelligentsia. On the flip side to this, it seems that the positions that appear far too in the realm of common sense to ever be morally or intellectually challenged either by the masses or the intelligentsia, seem to find the least amount of footing when scrutinized.

While the world of academia has its limitations, especially when attempts are made to popularise it, the world of the ‘real world’ of the everyday man, also suffers from its own intellectual limitations. The Dunning-Kruger effect is a term used for a psychological bias that recognizes the propensity that individuals have to overestimate their own competence and intellectual capability. In simplicity, the confidence with which one will make an assertion tends to negatively correlate with the amount of information that that individual has been exposed to, which is the exact opposite of what you would typically assume to take place.

The Dunning-Kruger effect could be summarised along the lines that, a little knowledge is a dangerous thing, while a lot of knowledge… is a complex thing.

It seems that we have, is the possibility of overconfidence in intellectual capacity both at the learned and at the unlearned end of town possibly due to the same reason being that coming to true knowledge, is difficult and hence shortcuts are taken. For example, while someone may have an immense understanding and credentials in, say, for example, neural science, it doesn’t necessarily mean that they have any understanding in climatology, yet due to their prestige and desire for air time, are more than willing to provide their thoughts.

Diets, diets everywhere

It probably wouldn’t be too far from the truth to state that there are now more diets than there are people in the Republic of Congo.

First, you have the no grains diet, then you have the no-fat diet, the no sugar diet, the high protein diet, the high-fat diet, the high vegetable diet, the high meat diet… and the data on which diet is best is as contradictory and difficult to ascertain as the Higgs-boson was to physicists. The problem that dieticians face is that, while there is great commonality in the fundamental operating functions within all human bodies, is that the human body is by and large the most complex machine known to man and possibly the most complex machine in the entire universe.

The problem that policymakers and economists face, is that the economy is one of the most complex and difficult to understand man-made machines ever created. Understanding the economy is a lot like trying to understand the human body. We know how to make it fatter and we know how to make it thinner, but there is a lot that the ex-lawyers, policy writers, bureaucrats, and career politicians with their political ‘science’ majors don’t know. More than that, sometimes, what can be considered evidently best for the body, is hard to implement and so excuses are made.

Fresh veggies, typically less food, and exercise is the widely accepted prescription for obesity, but implementation is challenging and a shrinking number of people are willing to make the sacrifice, meaning that it is no surprise that we get idiotic movements like “Healthy at Every Size” which preach that weight is independent to health… a counter-intuitive belief that can only be cooked up by those who have climbed so high in the ranks of the intelligentsia that they can no longer feel the reality of gravity, who are then blindly followed by those who want to vindicate themselves.

Healthy at Every Size (HAES), is, of course, a cop-out for not having to live with the reality that, while body types differ in shape and size, there are some fundamental rules that are true for all body types, namely being too thin or too fat is bad for your health. But of course, diets and exercise, are hard, nuanced and difficult to implement. The problem is that HAES is a belief that hasn’t stayed in the small domain of a few individuals’ personal eating habits, it is now implicitly in the doctrine of the US Republican party, explicitly in the Democratic party, and is making its way around the world.

Spending at Any Size

Once upon a time, humans were only considered healthy when they were of reasonable weight and fitness. Once upon a time, Governments were only considered stable and good when the books could be balanced and the budgets weren’t being driven into the ground. Once upon a time, inflation was measured based on the money supply, not immediate CPI.

These days you can be considered healthy at any weight and Governments can be considered healthy at any debt, and instead of dieting and exercising, we have HEAS and MMT.

Modern Monetary Theory (MMT) is the most stupid economic ‘theory’ that has ever graced the halls of government much less become popular. Much in the same way that HAES states that the body can be healthy at any weight, MMT states that economies and hence governments can be healthy at any debt.

While the typical MMT proponent will agree that personal balance sheets and corporate balance sheets can’t be healthy at any size. The MMT proponent will argue that since Governments can print money, government balance sheets can. It’s the same logic that a diabetic can eat whatever they want because we have insulin.

What about runaway inflation you ask? Well, there is an answer for that too, governments can simply up taxes when inflation gets out of hand. By omission, the Republicans are playing to this new rule book by simply running up Government debt, and the modern socialist wing of the democratic party is openly preaching the virtues of MMT as the ‘reason for why we can have nice things’, with presidential candidates like Bernie Sanders now pulling from this economic rule book.

Superficially, this sounds like a great way to ensure that government spending can keep increasing, healthcare spending and education spending can keep skyrocketing because unlike the individual, governments can just print more money when the coffers run dry. But, the big problem with this philosophy is that it fails to understand what the economy is, what function money plays in the economy and what causes economic growth.

If you doubled the amount of cash in a society tomorrow by printing more and then distributed it evenly to every man woman and child, what would happen? Would everyone become twice as rich?

It’s a fairly simple theoretical exercise, but the short answer is no. There is the same number of goods and services in that country, the same number of things to buy with that money, and the first thing that would happen is that the price for everything would likely double and the major difference is that the distribution of that buying power would be dramatically changed. Those without buying power previously would have substantially more, and those with buying power, most likely in the forms of savings, would have substantially less.

The reality is that economies are made up of work and stuff, money is simply the means by which we distribute consumption opportunity.

Governments printing more money simply moves the buying power from the savers to the spenders, the borrowers and itself, with the fundamental motivation behind MMT is that consumption would go up and those without buying power will have some through Governmental redistribution. It’s almost a robbin hood philosophy of taking from the rich and giving to the poor where the long term effect is that total consumption will increase and this will grow the economy. However, consumption isn’t the sole driver of economic growth, as much as it is a two-sided coin with savings.

When you go to borrow money for a house, a business, or to start an entrepreneurial idea, where do you borrow your money from? The obvious answer is the bank, but the bank is simply re-lending money that others have saved. What happens in the fractional reserve banking system is that those with savings, in the desire to receive returns on their savings, lend the money to those who can then use that money for productive purposes. When we rob from savers, we’re effectively reducing the power of these savings to invest in things that matter, and at the same time driving up short-term consumption, which in turn drives up inflation, which in turn robs further from savers and in the long run we change the fundamental growth engine of the economy. The capitalist engine works as the machine of natural selection where the inefficient distribution of savings, consumption opportunity, is killed off and replaced with the efficient distribution of savings and the competition created by the democratization of the currency ultimately leads to greater productive capacity over a period of time. However, MMT seeks to undermine this democratization, move the power from the market and redistributes it to the dictums of a few elected and unelected individuals.

MMT theorists aren’t running up the government printing press to simply redistribute cash to everyday people, they’re doing it to increase government spending. The second fundamental belief behind the MMT thought is that the government is better at handling economic buying power than the individual. This is the same government that spends huge amounts of money on overseas wars, highly inefficient and wasteful programs and also massive public sector pensions. MMT theorists believe that Government is so good at handling this, that they’re suggesting that this program will work on the premise that governments can control inflation through taxation. IT’S CRAZY!

Translated: Cede buying power to the Government and then further increase the size of government through taxation.

“in the private sector, profit and loss feedback pushes businesses to correct errors. In the public sector, the motivation is simply to spend without constraint, errors be damned’. – Antony Davis

“The zero interest-rate policy broke the social contract for generations of hardworking Americans who saved for retirement, only to find their savings are not nearly enough. And the interest the Federal Reserve pays on the excess reserves of lending institutions broke the money multiplier and handcuffed lending to small and midsized enterprises, where the majority of job creation and upward mobility in wages occurs. Government policies and regulations in the postcrisis era have aided the hollowing-out of middle America far more than anything the private sector has done. These changes even expanded the wealth gap by making asset owners richer at the expense of renters.” – Michael Burry

These people are big government authoritarians. Like HAES, the idea is catching on. Why? Because governments globally are desperate and governments, like the everyday man, can be swayed by the idiocracy of ideologues. Through endless mismanagement of public funds in attempts of parties on either side of the political fence to buy votes, our governments have driven up debt to record highs and when central banks have tried to remedy these failures, they’ve driven down interest rates to decade long record lows, which have instead driven up corporate and private debts to record highs.

Like a diabetic addicted to sugar, the doses of insulin have just been increasing and increasing to cope with the problem rather than deal with it. Rather than tackling debt when it was manageable, the world of the intelligentsia are now trying to sell to themselves and the world that, they’re Healthy at Every Size.

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